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Income Tax Act 2007

Deductions - Terminating provisions

DZ 15: Patent applications before 1 April 2005

You could also call this:

“How to claim a deduction for patent applications submitted before April 2005”

If you’re granted a patent in the 2005-06 tax year or later, you might be able to claim a deduction for the costs of your patent application. This applies if you owned the application, and it was first filed with the Intellectual Property Office of New Zealand or a similar office in another country before 1 April 2005. You can only claim this deduction if you weren’t allowed to claim it under any other rule.

To work out how much you can deduct, you need to use a special calculation. You multiply the number of whole months you’ve owned the patent application by the cost of the application, then divide that by 240.

Remember, even though this rule lets you claim for something that’s usually considered a capital expense, you still need to meet the general permission rules and other limitations for tax deductions.

You can claim this deduction in the same tax year that your patent is granted.

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View the original legislation for this page at https://legislation.govt.nz/act/public/1986/0120/latest/link.aspx?id=DLM1514248.

Topics:
Money and consumer rights > Taxes
Business > Intellectual property
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Part D Deductions
Terminating provisions

DZ 15Patent applications before 1 April 2005

  1. This section applies when—

  2. a patent is granted to a person in their 2005–06 income year or a later income year; and
    1. the patent is granted in relation to a patent application owned by the person; and
      1. the patent application, with a complete specification, was first lodged with the Intellectual Property Office of New Zealand or a similar office in another jurisdiction before 1 April 2005; and
        1. a deduction for expenditure on the patent application is denied under another provision.

          1. The person is allowed, in the income year in which the patent is granted, a deduction for expenditure on the patent application in any income year, calculated using the formula—

            (months of ownership ÷ 240) × cost.

            Where:

            • In the formula,—

            • months of ownership is the number of whole calendar months for which the person owns the patent application:
              1. cost is the cost to the person of the patent application.

                1. This section overrides the capital limitation. The general permission must still be satisfied and the other general limitations still apply.

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